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The following guest post is courtesy of freelance writer Tom Worn.
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Unfortunately, just like many other enjoyable activities, forex trading can become addictive and even harmful. Perhaps not directly harmful to your health like drugs, but financially harmful like gambling. To be clear, I am not equating forex trading to gambling, far from it. The two activities may only be relatively similar but one requires a high level of skill and proficiency and the other relies more heavily on luck.
Alright, back to forex trading addiction. Addiction comes when a trader starts to focus more on the potential profits to reap than on the actual process of trading. If you have been in this industry long enough, you probably know someone who keeps blowing all their capital. Probably have done it three or more times but every time they seem eager to return and open another account. Persistence is a virtue, but only if you learn from your mistakes, otherwise it just becomes an addiction.
Why is forex trading addictive?
Addiction to forex trading is brought about by the same reasons a drug or alcohol may be addictive. First, it doesn’t require a lot of capital. Today, you can open a live trading account with $500 for a standard account. Micro-lot accounts require even less, and an account can be opened with as little as $5. Additionally, making the deposits is very easy because there are very many ways of making cheap deposits, even using bitcoin nowadays. This low capital requirement is perhaps the main reason for the addiction to forex trading. Think about it, have you ever heard of someone who got addicted to trading the stock market? Probably not, because it needs a lot of capital.
Another reason for the addiction is its incredible ease of access. Once you have a trading account, you can place your trades from your computer, tablet or even smartphone. Besides, it’s just a simple matter of placing a buy or sell order, nothing complicated about that.
Finally, there’s the reason why anything else can be addictive, and it’s the adrenaline and endorphin rush. Every time you make a trade that becomes a winner, feel-good hormones, endorphins, flood your brain that give you pleasure. These make the act of trading forex more of a pleasurable act than an actual strategic and conscious decision. If you begin to operate in this manner, seeking a thrill, then it quickly becomes an addiction. After all, it’s a 24-hour market where the thrill never ends.
How do you overcome this addiction?
This may, at some point, start sounding like an Alcoholics Anonymous meeting, but an addiction is an addiction. The first step is to simply take a break from trading every once in a while and not sitting in front of the trading station all day and night. It is during these breaks that you have some time to think about what you are doing from a different perspective. There is no standard length of a break, as it would depend on your particular circumstance.
The next thing is to keep a journal of your trading activities, detailing all of your trades. It is not possible to remember all the trades that you have made, but keeping a journal would help. This would also show you whether you’re on the right track or not, and if you’re losing more than winning, then find a solution before going back to the trading.
It is unfortunate that forex addiction is rarely mentioned by anyone, particularly those trying to get you signed up. Nevertheless, now you know, having read this post. The only way to overcome addiction is to acknowledge it first and then taking steps to changing your course.